There is considerable uncertainty as to whether interannual variability in climate and terrestrial ecosystem production is sufficient to explain observed variation in atmospheric carbon content over the past 20-30 years. In this paper, we investigated the response of net CO2 exchange in terrestrial ecosystems to interannual climate variability (1983 to 1988) using global satellite observations as drivers for the NASA-CASA (Carnegie-Ames-Stanford Approach) simulation model. This computer model of net ecosystem production (NEP) is calibrated for interannual simulations driven by monthly satellite vegetation index data (NDVI) from the NOAA Advanced Very High Resolution Radiometer (AVHRR) at 1 degree spatial resolution. Major results from NASA-CASA simulations suggest that from 1985 to 1988, the northern middle-latitude zone (between 30 and 60 degrees N) was the principal region driving progressive annual increases in global net primary production (NPP; i.e., the terrestrial biosphere sink for carbon). The average annual increase in NPP over this predominantly northern forest zone was on the order of 0.4 Pg (10 (exp 15) g) C per year. This increase resulted mainly from notable expansion of the growing season for plant carbon fixation toward the zonal latitude extremes, a pattern uniquely demonstrated in our regional visualization results. A net biosphere source flux of CO2 in 1983-1984, coinciding with an El Nino event, was followed by a major recovery of global NEP in 1985 which lasted through 1987 as a net carbon sink of between 0.4 and 2.6 Avg C per year. Analysis of model controls on NPP and soil heterotrophic CO2 fluxes (Rh) suggests that regional warming in northern forests can enhance ecosystem production significantly. In seasonally dry tropical zones, periodic drought and temperature drying effects may carry over with at least a two-year lag time to adversely impact ecosystem production. These yearly patterns in our model-predicted NEP are consistent in magnitude with the estimated exchange of CO2 by the terrestrial biosphere with the atmosphere, as determined by previous isotopic (delta (sup 13 C) convolution analysis. Ecosystem simulation results can help further target locations where net carbon sink fluxes have occurred in the past or may be verified in subsequent field studies.